The illusions of a spoonful of sugar in international investment in Africa
- Roderick Ndegwa
Last month, on a trip to London for an Africa focused investment conference, I spent my only free evening by taking the young son of a friend of mine to go and see the recently opened musical, Mary Poppins, in the famous West End.
For those not familiar with the story of Mary Poppins, it recounts the tale of a young nanny who descended from the rising smog of London’s skyline, clutching an umbrella in her right hand on a cold, blustery evening in Edwardian London. With her red rosy cheeks and cheery disposition, Mary Poppins became nanny to the Banks children, singing joyful songs such as ‘A Spoonful of Sugar’ and ‘Supercalifragilisticexpialidocious’. She was the investment Mr Banks, her bank owning employee, needed to steer his children’s development.
There were similarities I found in the musical story with much of what I had been listening too at the conference earlier that day. In more recent times, we have seen winds of change in the way the international community views the needs of Africa. The continent’s status is evolving from aid recipient to trade partner amongst many of the globe’s great powers. As the EU’s Commissioner for International Cooperation and Development, Neven Mimica, explained to journalists, “Gone is the narrative of ‘donor-recipient’ and the outdated perception of Africa as a primary commodity exporter or a continent of instability. Gone is the narrative of charity and development assistance. Now is the time for investment, [a] win-win partnership based on mutual interest”.
But much of this new-found craving for investment in Africa is not coming from the West, but rather the East. Africa is fast becoming the track upon which vying superpowers race to expand their spheres of influence. Russia, China, and India have pumped billions into countries right across the continent in areas like defence, agriculture, and infrastructure and natural resources. Commentators fear the start of a neo-colonial scramble for the continent’s resources.
With characters that jump in and out of paintings, dancing penguins and a flying umbrella, Walt Disney’s Mary Poppins is often said to contain myriad metaphors for illusions of unrealistic expectations. Is this drive from the East of foreign direct investment the panacea for all Africa’s woes, or is the spoonful of sugar a unrealistic illusion for long term sustainable growth that will only line the pockets of those in power?
Within the last year alone we have seen several big conferences hosting African heads of states, all with the aim of improving trade relations and investment flows. In October Russian President Vladimir Putin welcomed 40 leaders to the Black Sea resort of Sochi; in September 2018 President Xi Jinping presided over the third Forum on China-Africa Cooperation in Beijing; and in August of this year, the Tokyo International Conference on Africa’s Development (TICAD) brought together trade representatives from Japan with 42 African heads of state, presidents, vice-presidents, and prime ministers from 53 countries.
This sea change is almost unanimously welcomed across the board as commitments have started to emerge. The three-day TICAD closed in August with the adoption of The Yokohama Declaration. Signed by Japan and 53 African countries, the joint declaration signalled the country’s intention to move away from government aid to promoting private-sector investment. The inaugural Russia-Africa Summit reportedly yielded $12.5 billion worth of deals, with Putin asking attendees to “drink to the success of our joint efforts to develop full-scale mutually beneficial cooperation, wellbeing, peaceful future and prosperity of our countries and people”.
This appears to be the generally accepted solution to the development problem. However, one must be cautioned against the caveats that accompany many of these trade deals. The alarming photos that circulated following the Sochi Summit showed Africans delighting in the newest weapons technologies, posing for photos with sniper rifles and laser-guided missiles.
The images served as a stark reminder to the fact that Russian mercenaries are presently playing politics in many of the continent’s most unstable corners. Just this week it emerged that soldiers from the Wagner Group, a private military company controlled by one of Putin’s closest confidants, Yevgeny Prigozhin, were forced to retreat from the northern jungles of Mozambique following clashes with jihadist insurgents. The area has become a top priority for both Russia and the Mozambique governments as they attempt to negotiate investments in recently discovered gas reserves worth around $40 billion.
At the other end of the continent, China has been working hard to secure infrastructure and education deals with the Ghanaian government. As part of its Belt and Road Initiative, it’s just agreed to finance a $2 billion rail, road and bridge construction project in exchange for 5 per cent of the country’s bauxite reserves. Bauxite is the main component of the second most widely used metal in the world, aluminium, and has long been at the centre of corruption scandals on the continent. Environmentalists fear that the project could lead to harmful consequences for the Atewa Forest, which forms part of the Upper Guinean Rainforest. They warn of the pollutants that could enter three major rivers from the Bauxite mine, which supply the drinking water to three major regions of Ghana, including around 1 million people in the nation’s capital, Accra.
China has also agreed to fund the construction and upgrade of 15 both new and existing universities across Ghana to the tune of $130 million. At a time when it is attempting to exert influence over Western university campuses through its Confucius Institute, many believe it will be able to change Ghanaian curriculums as a means of expanding its soft power.
The emphasis by all these international partners on private investment has the potential for exploitation. The idea of using the private sector as a vehicle, separate from the state, to provide a plausibly deniable means of corruption, is something we have seen many times in the past, and I’ve no doubt will see more of in the future. Foreign-owned companies, whether they be from Japan, India, China or Russia, must not rely on the use of ‘fixers’ to fund a parallel shadow economy, which has so often been the case until now.
As a recently published article in The Daily Maverick highlights, “powerful middlemen with access to power and corrupt deals have made the somewhat chaotic cities of Africa their home. To ensure sustainable growth it is necessary to rid economies of their tentacles”. The articles refers to the actions taken by a number of middlemen at the heart of suspicious business deals across the continent, including Sammy Pa from the now infamous Queensway Group, Kalpana Abe who on behalf of the Japanese multinational Kansai Plascon seems to have leveraged connections with President Museveni and Samuel Mebiame, the son of the former Gabonese Prime Minster.
There is promise that these international summits and conferences will form a crucial part of the African development story. With the continent’s population expected to grow by more than 2 billion in the next 20 years, it’s appetite for energy will double the global average. It has the potential to be a leader on environmental issues, with a recent report published by the International Energy Agency detailing how it is poised to lead the world’s impending green revolution. Actors must stave the temptations of unsustainable energy sources dangled by countries like China.
It mustn’t delve into the murky world of guns-for-hire to sort out issues of security nor must it slide into shadow economies, picked off by wealthy fixers. Foreign direct investment must be considered as a false illusion, conning people into the belief of quick-fix development. It is down to those in power to ensure the future of the African continent is sustainable and viable for the long term, and for this to happen it requires more than just a spoonful of sugar to make the medicine go down.